Wisnu Wibowo, - and ADILAH AYU ROSYIDAH, 041211133096 (2020) Transparency in the Central Bank and the Mechanism of Transmission of Interest Rates: Case Study of Asia-Pacific Countries. International Journal of Innovation, Creativity and Change, 11 (9). pp. 451-475. ISSN pISSN: 2201-1315, eISSN: 2201-1323

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Abstract

This study aims to determine how the impact of transparency in the central bank in monetary policy transmission mechanism through interest rates can influence the ultimate goal in the form of price stability. The results of this study can also be used to determine whether monetary policy that uses interest rates affects the rate of inflation occurring in countries in the Asia-Pacific region, as well as to see whether the monetary policy transmission mechanism can be used in accordance with the theory of transmission mechanism through the interest rate. Panel data were collected yearly from 1998-2014 and estimated using PVAR (Panel Vector Auto Regression) analysis method. The results of this study indicate that the monetary policy transmission mechanism used in the Asia-Pacific region proves to be relevant to the theory of transmission mechanisms through the interest rate channel. The ultimate goal of price stability is also proven to be achieved. The result is shown by the result of estimation from PUAB interest rate and lending rate which proved to be a statistically significant negatively affect the inflation rate. Meanwhile, based on the results of impulse response, this study found that the existence of central bank transparency causes fluctuating inflation rate.

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